Saturday 24 March 2018

Debt Crisis: Greek default looms as talks on agreement continue with PM Papademos

Greek prime minister Lucas Papademos. Photo: Getty Images
Greek prime minister Lucas Papademos. Photo: Getty Images reporters

GREEK coalition leaders are studying a draft deal on further cuts demanded to secure a new bailout that will allow the country to avoid bankruptcy next month.

Prime Minister Lucas Papademos said that the heads of the three parties backing his interim government received the 50-page document, drafted with the country's debt inspectors, earlier today.

A meeting of Mr Papademos with the party leaders has been moved back to give them more time to study the draft.

The talks had already been postponed for three days to make time for negotiations with the European Union, the European Central Bank and the International Monetary Fund, on whose approval the continued flow of Greece's vital €130bn in rescue loans depends.

Without the bailout, Greece would not have enough money to pay off a big bond redemption next month, triggering a default that could send shockwaves around financial markets and the global economy.

The three organizations, known as the troika, have demanded new private sector wage and pension cuts, public sector sackings and cuts in health, pension and defence spending.

The troika's proposals have horrified unions, who held a general strike on Tuesday, as Greeks have been hit with a spate of income cuts and drastically increased taxation over the past two years.

But Athens has minimal ground for manoeuvre. Without the rescue loans, the country will default on its massive debts in March, when it faces a huge bond redemption.

Disagreement still remains on the extent of those cuts between parties who face national elections in late April - after the debt deals have been sealed and implemented. The majority Socialists, main rival conservatives and the small right-wing LAOS party are also at odds over when the elections should be held.

The Socialists, who handed over power to Mr Papademos in November and are trailing badly in opinion polls, want him to stay through parliament's four-year term that ends in late 2013. But conservatives, buoyed by their lead in opinion polls, are demanding an April vote according to plan.

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